MIT Sloan Management Review Article on Trapped in the Data-Sharing Dilemma

Social log-ins offered by large online platforms can help websites win users in the short term, but this may come at a price.

Managing passwords and user credentials for a host of websites and apps has become increasingly challenging for consumers of digital content and services. To address this annoyance, large online platforms allow unaffiliated websites to authenticate users through a shared log-in — for instance, “Log in with Facebook.” However, such log-ins are more than just a simple solution to ease user frustration. They allow the issuing platforms to track user activity across multiple unaffiliated websites and apps, while the content or service providers adopting the log-ins receive demographic and behavioral data that can help them improve user experience.

Does this setup benefit all parties involved? Sometimes. But in many cases, providers become trapped in a data-sharing dilemma: They may have short-term incentives to adopt such log-ins but suffer negative economic impact in the long run.